Interest from foreign investors in Australian property, including residential, has continued despite the impact of lockdowns and property tax rates.

Australia has one of the highest – if not the highest – rates of taxation in the Asia Pacific region, at both the individual and corporate level. As a comparison, Australia’s personal tax rate of 47 per cent is more than double of Singapore’s rate of 22 per cent almost triple the rate of Hong Kong’s rate of 17 per cent.

Although investment from mainland China has scaled back in recent years, we have seen continued interest in Australian property by investors in other parts of the region, including Singapore and Hong Kong.

Australia remains a favourable to foreign real estate investors for several reasons. Firstly, it is a very stable jurisdiction. Australia is a relatively affluent, multicultural and resource rich country. Its resilient economy is coupled with a democratic government, steady currency, highly skilled workforce and strong governance.

In addition, Australia’s land price growth, particularly in Sydney and Melbourne, has been a huge attraction for foreign investors whether it be for personal or business reasons.

The trend of Australia’s increasing tax costs for foreign buyers of real estate however could hinder future investment. Land taxes have increased consistently over the past seven to ten years at both the state and Federal level, and the additional impost is a burden for foreign investors in real estate.

If the trend continues, foreign investors into Australia may consider alternative destinations for real estate investments such as United States, Canada and the United Kingdom.

Despite uncertainty in the global markets, it is likely interest in the Australian market will continue. Inflation and rising interest rates will put pricing pressure on property, however as these are global trends it should not detract investors from looking to acquire Australian property assets.

If you are a foreign investor seeking to learn more, we recommend reaching out to an adviser regarding your inbound and property tax strategy. HLB has also produced a helpful guide, Doing Business in Australia, which addresses a broad range of government, economic and tax-related information.